What we can learn from Yogi Berra: Discussant's response to "Auditing for fraud: Perception vs. reality";

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What We Can Learn From Yogi Berra
Discussant's Response to "Auditing for Fraud: Perception vs. Reality"
Karen V. Pincus*
University of Southern California
As a baseball fan, I appreciated that Alan Winters and John Sullivan began their paper, Auditing for Fraud-Perception vs. Reality, with a quote from Yogi Berra. They ended their paper with a comment that the profession's history of efforts to grapple with fraud detection already contains too much repetition, calling to mind another famous phrase often attributed to Yogi: It was déjà vu all over again. So, in my turn at bat, I plan to follow Alan and John's lead and consider what audit practitioners, educa­tors
and researchers can learn from Yogi Berra.
My comments address four questions that Alan and John's paper made me think about, the first two dealing primarily with audit practice, and the other two related more to audit education and research: (1) Why do auditors miss fraud clues or fraud itself? (2) How much assurance is reasonable assurance? (3) Does audit education begin too late? and (4) Do auditor characteristics matter?
Why Do Auditors Miss Fraud Clues or Fraud Itself?
In the body of their paper, Alan and John present a large number of thoughtful observations and interesting suggestions about auditing for fraud. Many of their obser­vations
address the implicit question: Why do auditors miss fraud clues or fraud itself? Consider, in response to this question, George Bush's favorite Berra quote concerning Yogi's reason why the Yankees lost the 1960 World Series to the Pirates: "We made too many wrong mistakes."
Let me briefly review four "wrong mistakes" I think auditors make that lead them to miss fraud clues or fraud itself and compare and contrast my views to those expressed in Alan and John's paper.
The first wrong mistake: expecting too much of the fraud risk model
First, auditors make the wrong mistake of looking too hopefully at the fraud risk model for strong predictive relationships. Alan and John focus most of their criticisms on the fraud risk model and I find most of their criticisms well taken, as well as their conclusion that the risk model, as currently expressed in the literature, can and should be significantly improved based on what we've learned since SAS #53. But, I also think we must recognize that even if we improve the fraud risk model in every feasible way, there will still be a limit to the predictive ability it can provide us.
Let me put on my hat as an educator for a moment to explain why this is so. One of the challenges that faces us as teachers of auditing is to explain to our students, who have never been on an audit, what we mean when auditors talk about becoming "satis­fied"
about an audit objective, or feeling "comfort" about an audit conclusion. What
* As of August 1995, University of Arkansas.
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